Chinese companies have been able to see another year of record dividend payments
China flag flapping wings with Lujazui Financial District in the background.
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Chinese companies are attracting investors who are tempted to pay record dividends and buy back stock amid strict corporate governance reforms, with some market watchers saying they are on the horizon.
Last year, listed Chinese companies paid 2.4 trillion yuan ($328 billion) in dividends. China Securities Regulation Authority Data (CSRC). Additionally, the company has repurchased 147.6 billion yuan worth of shares.
Goldman Sachs estimates that Chinese companies’ cash distributions could reach $3.5 trillion this year to notch a new high, banking Chinese equity strategist King Lau in early February I wrote it in a note published on.
Herald van der Rinde, an Asian equity strategist at HSBC, repeated similar sentiments when asked about his prospects for another year of record dividends.
“I think they’ll continue. Companies don’t know where to put their cash. They don’t get much from the bank, so please give it back to shareholders. This is a huge change in thinking,” he said.
Over 310 companies are expected to distribute dividends of over 340 billion yuan in December and January 2024 alone, with the number of companies paying dividends jumping nine times, compared to the last quarter. It shows a 7.6x increase in total payments. year, CSRC added to the statement.
Dividend yields on Chinese stocks also rose to around 3%, at the highest level in nearly a decade, Goldman Sachs data shows.
High resolution Chinese stocks yield It surpassed them Asian emerging markets According to index data, it is about 15%.
Government priorities
The Chinese government is actively encouraging businesses to pay higher shareholder benefits by providing tax incentives, said HSBC’s van der Linde.
Improved shareholder returns became a priority for the Council of State and CSRC in 2024. China’s central bank last October Released 300 billion yuan A targeted succession program to help listed companies and major shareholders buy back shares. In April 2024, regulators also tightened stock list standards and cracked down on illegal stock sales. Regulations on dividend payments have been strengthened.
In August last year, 677 listed companies reported cash dividend plans, up from 500 since the same period last year in 2023. Data from the China Public Association.
This has been greatly promoted by Beijing in the movement to improve the efficiency of businesses. When Beijing says jump, Soes says, “How expensive is it?”
Jason Huss
Rayliant Global Advisors
State-owned enterprises. especially. I have it I’m on the front line Allianz Global Investors has seen a number of notable companies out of this surge in dividend payments and stock buybacks, including Petrocina Dividend yield of approximately 8%and CNOOC group with a yield of 7.54%.
“This is very driven by Beijing in its move to improve corporate efficiency. When Beijing says “how high is the jump,” Jason HSU, founder and chairman of Leiliant Global Advisor, said He said, adding that the Chinese government is offering it. A Chinese company with a lucrative loan rate to fund dividend boosts.
Private companies are also increasing their cash payments. For example, e-commerce giant jd.com In September, it approved a $5 billion buyback over three years.in addition to a dividend yield of 1.9%.
Especially for large companies, investors can expect more record dividend payments, particularly from the SOE giant, HSU told CNBC.
However, China’s dividend payment rate, which measures dividends paid to shareholders responsible for the company’s net profit, is still behind some of its Asian counterparts.
China’s dividend payment ratio was 52.58% in late January. According to data compiled by Reuters and LSEG. It’s higher than Japan’s 36.12% and South Korea’s 27.6%, but this figure is still behind Australia’s 89.2% and Singapore’s 78.13%.
Returning locals to the stock market
Le Xia, Asia’s chief economist at BBVA Research, said the government’s push for high ration payments will increase Chinese stocks in the short term, attracting long-term investors from domestic and international markets.
However, this could also mean more cash payments flowing from China to the offshore market, which could put some pressure on the Chinese yuan, Xia told CNBC.
A higher dividend payment is a good option for short-term placement of local investors.s Shawn Lane, managing director of China Market Research Group, said the country’s real estate and stock markets remained in malfunctions.
China’s economy and market sentiment Poor in recent years. an First Surge Peter came out in the country’s benchmark CSI 300, caused by the electricity of government measures introduced in September.
“You should be paid well with dividends or other common actions to have the pain of the fact that a simple way to see it may not result in recovery in the evaluation,” says Asian Julius. Bear’s Chief Investment Officer said, Bhaskar Laxminarayan.
Investors are being paid for their patience, he said. “If not, it’s not worth it.”
According to HSU of Rayliant Global Advisors, dividends will win cash in the hands of households, while attractive yields will bring investors back into the stock market, especially those looking for a lower-yield bank deposit alternative.
“(a) paying a very high ration yield while waiting for the catalyst is a pretty good deal,” HSU said.